Strategy Regarding Pullout of Loans and Credit Business
Revision to Strategy
Pullout of Loans and Credit Business-elimination of downside risk -August 13, 2007

GMO Internet Inc.
(TSE First Section: 9449)

InternetforEveryone

http://www.gmo.jp/en
Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

1

A Cautionary Statement About the Contents of this Document
The contents of this document are based on current generally recognizedeconomic and social conditions as well as premises considered reasonable
by the GMO Internet Group as of August 13, 2007. Please note that in theevent of any change in the business environment or other unforeseen
occurrence they are subject to change without prior notice.

2Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy
Pullout of Loans and Credit Business-elimination of downside risk -TSE Stock Code: 9449

3Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit Business
Summary – Elimination of Downside Risk
Complete Pullout of Loans and Credit Business
・Decision based on concern regarding shareholder returns and uncertainty in the businessenvironment.
・All stock held in GMO LOAN-CREDIT HOLDINGS Inc. (91.1%) is being transferred to its
executive team and the company is being excluded from the consolidation from the second
half of the term.
・¥6.4 billion shrinkage loss (withdrawal loss) to be recorded in the consolidation as a resultof the transfer.
・Downside risk eliminated - we now hold only share warrants leaving open the possibilityof recovering capital invested.

Financial Strategy and Sale of GMO Internet Securities and Other Stock・In consideration of financial balance all stock held in GMO Internet Securities (95.9%) isbeing transferred to Masatoshi Kumagai. A sale gain of ¥2.8 billion will be recorded in theconsolidation.

・The company will be excluded from the Internet Finance segment.
・Off-market sale of around 10% of GMO-HS to yield sale gains of around ¥1 billion
・Pullout of the loans and credit business to harm shareholders‘ equity - sale of securities
allows us to regain our financial base and dramatically reduce balance sheet.
TSE Stock Code: 9449

Growth Strategy after Pullout of Loans and Credit Business・To fully utilize our strengths in the stable infrastructure and media segments

4
Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit BusinessBackground to the pullout:
From our entry into loans and credit business to the present
August 2005 Entry into loans and credit business with purchase of Orient Credit
January 2006 Supreme court ruling allows excess interest repayment claims
August 2006 Acquisition of Just Inc. and 13 other companies in the north east ofJapan enables launch of loans with guarantor
October 2006 Japan Institute of CPAs revises guidelines concerning interest
repayment reserves
December 2006 Reforms to moneylending laws passedDecember 2006 ¥10.5 billion is appropriated in an interest repayment reserve
May 2007 Agreement to enter into roll-up business with Lehman Brothers JapanMay 2007 Major consumer finance companies make significant increases to theirinterest repayment reserves
July 2007 Supreme court rules that 5% interest is payable in the period up until excessinterest is repaid
TSE Stock Code: 9449

July 2007 Sanyo Credit announces major increase in interest repayment reserve andabsorption by Promise(Blue text represents action taken by the group)
Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

5

Revision to Strategy – Complete Pullout of Loans and Credit Business
Three reasons why we are pulling out of the loans and credit business
１．Uncertainty in the Business Environment
A）Extent of interest repayment risk impossible to determineB) Hidden Risk – New judicial rulings, new legislation and newinterpretations of existing legislationC) Instability in profit and loss statement – industry subject towavering accounting treatment standards

２．Business Value and Growth Potential in Infrastructure andMedia Segments Overshadowed by Above Factors
・Major balance sheet risk overshadowing PER and growth
expectation in other business segments

TSE Stock Code: 9449

３．To Focus Management Resources on the Infrastructure andMedia Segments
・Management are freed from focusing on downside risk toconcentrate aggressively on a major turnaround
6Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit Business
Loans and credit business withdrawal scheme: Upside potential
Off-market Saleof 10% of GMO-HSStock(GMO-HS remainsin consolidation)

Transfer of all stockfor ¥5 million

Off-market saleGain: ¥2.8 billion
Masatoshi Kumagai

95.9%

Transfer of all stockfor ¥4.8 billion

TotalNK3
Consolidated
Holdings
Assets: approx.
(new company) ¥60 billion andsecuritized assets
91.1%¥47 billion

Withdrawal loss: ¥6.4 billion

Gain: ¥700 million

GMO Internet

GMO
LOAN-CREDIT
Warrant grants HOLDINGS(End ofJune 2007)

100%
GMO
Internet Securities

GMO NetCard

Total Assets:
100%approx. ¥22 billion(End of June 2007)

ASA5

TSE Stock Code: 9449

Concentration ofManagement Resources on
Internet Infrastructure andMedia Segments(Holdings Company)

JUST Inc. and 14 other companies7Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit Business
Summary of balance sheet changes
BS at the end ofMarch 2007

BS at the end ofJune 2007

BS on August 142007

Forecast BS at theend of December 2007

Total
Assets¥139.5billion

Total
Assets¥134.0billion

Total
Assets¥57.0
billion

Total
Assets¥30-40billion¥3 billion

Shareholders’Equity Ratio
5.3%
Shareholders’Equity¥11.6 billion

Shareholders’Equity Ratio
8%
TSE Stock Code: 9449

Actual¥6-11 billion

Shareholders’ Equity Ratio

15～20%
28～37%(after conversion of bonds)

End-of-DecemberForecast¥600 million

Shareholders’Equity Ratio
0.5%
Decrease inshareholders’ equity
resulting from loss inthe loans and credit
business in the interim
term・Reduction in balance
sheet following
withdrawal from financebusiness (approx. a ¥77
billion reduction)・Sale of stock in GMO
Internet Securities andGMO-HS to boost
shareholders’ equity(¥2.4 billion after tax)

・Further streamlining ofbalance sheet due toreduction in interestbearing liabilities
・Sale of eBank stock tostrengthenshareholders’ equity(¥22.5 billion)
・A further ¥5 billion
reinforcement ofshareholders' equity ifbonds are converted

Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

8

Revision to Strategy – Complete Pullout of Loans and Credit Business
Simulation: Shareholders’ Equity Ratio to Increase from
15% to 37% within the year
ActualEnd-of December
Forecast

An ¥11.0 billion Recovery in Shareholders’ Equity

Shareholders’Equity¥16.6 billion

Interim Term
Loans and Credit A ¥6.0 billion Recovery in Shareholders’ Equity
Business Loss＋WithdrawalLoss- ¥18.6 billion

Sale of eBank
Stockapprox. ¥2.5B

Sale of Stockin GMO Internet
Securities and GMO-HS(after tax)
Net profit outside theloans and creditbusiness¥2.6B
TSE Stock Code: 9449

BondConversion
Up to ¥5.0B¥2.4B
August 14, 2007

2007 Interim BS

9Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit Business
Simulation:
Reduction in GMO Liabilities - major reduction within the year
Major Reduction in Interest Bearing
Liabilities by End of Year
Sale of Stock ineBank
Approx. ¥7.2B

Sale of Stockin GMOInternet Securities
and GMO-HSapprox. ¥6.0B

Interest Bearing
Liabilities
at the End of theInterim Term

¥30.3B
Cash Reservesat the End of theInterim Term

ActualEnd-of DecemberForecast¥16.2BTSE Stock Code: 9449

10Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit BusinessResults Forecast Revision: Upward Revision in Infrastructureand Media Segments
The Whole Consolidation (Full Term)
Unit: ¥millions
Initial Forecast

Difference inLoans andCredit Businessin First Half ofTerm (MainlyInterest Repayment
Related Expenses)

Impact ofExclusion ofFinance
Segment in
Latter Half ofTerm (ComparedIncrease inFull Term
Forecast inInfrastructureand MediaSegments

New Forecast

to Initial Forecast)

Sales

60,000-1,800-14,500

2,800

46,500Operating
Profit7,000-13,800-2,000200-8,600Ordinary
Profit6,300-13,800-2,000200-9,300Infrastructure and Media Segment Results Forecast (Excluding Finance Segment) (Full Term)

Unit: ¥millions

TSE Stock Code: 9449

Initial Forecast

Increase in Full
Term Forecast
in Infrastructureand MediaSegments

New Forecast

Sales

30,2002,800

33,000Operating
Profit3,500

2003,700OrdinaryProfit

2,800200

3,000

Infrastructure andMedia Business PL
Revised Upwards

11Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit Business
Why we Expect Improved PL and Profit Growth
１．Reduction of Interest Costs (Non-Operating Expenses)→As a result of a reduction in interest bearing liabilities, interest
costs forecast for 2007 (approx. ¥700 million) will be reduced toalmost zero in the next term

２．Tax Advantage on Net Loss Carried Forward Due toWithdrawal from Loans and Credit Business→A tax advantage of approximately ¥32.0 billion over 7 years
beginning in the next term

３．Further Accelerated Growth in the Infrastructure andMedia Segments from the Next Term
TSE Stock Code: 9449

2005 to 2006: 39% growth in operating profit
2006 to 2007: 16% growth in operating profit
From 2007: management completely focused on profit, growththrough synergy!
12Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Revision to Strategy – Complete Pullout of Loans and Credit Business
Strong Performance Revealed when Finance Segment is Excluded(¥hundred millions)(¥hundred millions)

Sales

Operating Profit6020082008(image)(image)

400

2007

50(forecast)

2007(forecast)
40300

30200

20100
10TSE Stock Code: 9449
0Sales

2003

2004

2005

2006

2007

2008

156235280291

330

380

0

Operating Profit2003

2004

2005

2006

2007

2008

212823323745

13

Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Strengths in the Infrastructure and Media Segments
Maximizing the strengths of our original businesses, theinfrastructure and media segments
Stable Customer Base
560,000 businesses

Customers

Up Selling

Call Center
300 Booths

Web Marketing

７８ Sites

NetRatings Japan Ranking: 622 million90.6%
individual users× Cross Selling

Sales PowerManagement Strength

Sales Reps
350

SalesPartners
3000

×Domain / Hosting

Security
Advancing into

E-Commerce
Technology&Dominant
40,000 stores andProduct Strength rapidly expanding
GlobalMarketMarket Share

Search / CGM

40 million
plugins

TSE Stock Code: 9449

All supported by our organization strength!
14Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Strengths in the Infrastructure and Media Segments
Maximizing the strengths of our original businesses, theinfrastructure and media segments

Further details on growth strategy
in our interim results presentationon August 16,TSE Stock Code: 9449

15
Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.

Internet for Everyone

16
Copyright (C) 2007 GMO Internet, Inc. All Rights Reserved.